** Tesco & WM Morrison - the 2 worstperforming UK large-caps this year - are contrarianvalue plays here says Investec AM's John Stopford.
** Hit by discount retailers both have lost market share,seen margins contract & seen investors leave the boat.
Tesco vs FTSE: http://link.reuters.com/gym62w
Morrison vs FTSE: http://link.reuters.com/hym62w
** Peer snapshot: http://link.reuters.com/jym62w
** Stopford says market share gains of discount supermarketswill likely slow down in future.
** Taking into account higher quality available at thelarger supermarkets discount shops aren't as relatively cheapanymore (Stopford calculates a gap of 10-15% currently).
** Big data could come to the rescue as the larger chainsare in a good position to extract some juice out of theirloyalty programs via personalized offers.
** Stopford says discount supermarkets will find it harderto take on Tesco, Morrison in more affluent areas such as Londonand southeast England.
** Both stocks trade within 5% of their 52-week lows, havesizeable short-positions and analysts, on average, remain firmlynegative on earnings & price targets. (RM://sudip.kargupta.thomsonreuters.com@reuters.net;RM://vikram.subhedar.thomsonreuters.com@reuters.net)